In a case concerning coverage under a motor truck cargo insurance policy, a truck driver locked a truck and secured the two flatbed trailers, but left the keys under the floor mat inside the cab of the truck.

Following a theft, Lloyd's Underwriters ("Lloyd's") argued that this loss was not covered, because the policy in place only applied to trucks subject to such trucks "having all their openings closed, securely locked and all keys removed…."

The Plaintiff’s action against Lloyd's with respect to the disappearance of cargo on one of its truck trailer units was allowed. The court held that "all keys removed" created ambiguity as to whether the keys were intended to be removed from the locks or from anywhere in the truck. The Court found the wording of the Unattended Truck Endorsement was ambiguous, and interpreted the policy wording against Lloyd's.

Lloyd's issued a motor truck cargo insurance policy to the Plaintiff which included an exclusion for "any losses from unattended trucks while in the ordinary course of transit". The Lloyd's policy also contained an Unattended Truck Endorsement which provided that, in consideration of an additional premium charged, the policy was extended to included losses to cargo "directly resulting from forcible and/or violent entry to unattended trucks, subject to such trucks having all their openings closed, securely locked and all keys removed…."

On March 1, 2006, a truck and two flatbed trailers owned by the Plaintiff and insured under the Lloyd's policy were stolen from the parking lot of a truck stop. A cargo of electrical cable reels was stolen from the trailers. The two trailers had remained attached to the power unit and the driver had locked the doors of the power unit, leaving the keys under the floor mat or on the floor of the cab. The driver had gone into the truck stop leaving the truck unattended as defined in the Lloyd's policy. The Plaintiff made a claim on the insurance contract as Lloyd's had denied coverage on the basis that the keys had not been removed from the truck.

The Plaintiff argued that it was entitled to the protection of the Unattended Truck Endorsement and the fact that the keys were left inside the locked truck was immaterial. The Endorsement extended coverage to include losses directly resulting from forcible and/or violent entry. In this case, all of the openings were closed and securely locked and, therefore, access to the power unit must have occurred due to forcible and/or violent entry. Lloyd's disagreed with this interpretation noting that the coverage provided was specifically made subject to the trucks having "all their openings closed, securely locked and all keys removed". Lloyd's argued that the phrase "all keys removed" was unambiguous and means that all keys must be removed from the truck. The Court disagreed noting that it was possible that the phrase "all their openings closed, securely locked and all keys removed" created ambiguity as to whether the keys were intended to be removed from the locks or from anywhere in the truck. The Court could not resort to the common practice in the industry as no evidence was placed before it with respect to whether or not it was common practice to leave unattended trucks running where the weather was extremely cold, as suggested by the Plaintiff. However, given the ambiguity in the wording, the Court held that this was one of the appropriate cases to resort to the contra proferentem doctrine with the result that the policy must be interpreted against the insurer.

The Court rejected the submission put forward by Lloyd's that the claim was statute-barred. Section 3(1)(a) of the Limitations Act provided for a two year limitation after the date on which the claimant first knew, or in the circumstances ought to have known, "that the injury was attributable to the conduct of the defendant…". The Court agreed with the position set out in Johnson v. Wunderlich (1986), 57 O.R. (2d) 600, that in an action for breach of contract, the cause of action arises from the date of the breach and that such a breach occurs when the insurer denies liability or the insured knows or ought to know that his claim will not be honored. In the case at bar, the action was commenced within two years of the receipt of the denial from Lloyd's. Therefore, the action was not statute barred.

In the result, the Court found that the Plaintiff's claim for the disappearance of cargo from one of its truck trailer units was covered under the Unattended Truck Endorsement of the Lloyd's policy.